The biggest support for 2.0%+ GDP growth in 2023 (and no recession) came from the lack of any serious economic shocks like fuel spikes, inflation, war, and pandemic that suffocated the economy during the prior 3 years. But economic risks are higher again. And while no single issue can knock a solid U.S. economy off the tracks, a combination of smaller threats could derail GDP in 2024.
Read MoreCrude oil prices have been anything but stable over the past 2 years. History: Nymex light crude oil futures closed out 2021 in the mid-$70s per barrel before the Ukraine war drove prices to a record-high $123.70 on 3/8/22. Oil prices then declined steadily in the 2nd half of 2022 and averaged $74.95 for the 1st half of 2023.
Read MoreIn last week’s quarterly Hogs & Pigs report, the USDA pegged all hog and pig inventories at 74.3M head, up 0.3% from a year ago. It shows that producers have not yet trimmed herd numbers in response to large supplies and lower prices. They are trying, as indicated by the breeding herd being down 1.2% from last year.
Read MoreIn Friday’s monthly cattle report, the USDA said feedlot inventories were 11.34M head on Sept 1, down 2.2% from a year ago. New placements onto feedlots in Aug were down 5.1%, and July marketings were down 6.0%. Beef cow herd numbers are at a 52-year low – with no signs that ranchers are planning to expand anytime soon.
Read MoreSoybean oil prices are steady for now, but two powerful forces have the potential to drive prices higher. The first is El Niño’s effect on palm oil in Malaysia and Indonesia. Soy-oil and palm oil prices are highly correlated and past El Niño events have seen drought-affected palm oil prices more than double.
Read MoreDairy markets have continued to strengthen on tightening milk supplies. July milk production, down 0.5%, was below year-ago levels for the 2nd straight month. Class III milk futures are $18.48/cwt (9/8) after averaging $13.87 in July and $17.03 in Aug. Cheese in cold storage was 2.2% below a year ago in July.
Read MoreThe summer might be coming to a close, but demand for ground beef and burgers is showing no signs of slowing. Blame it on the popularity of burgers and ground beef; even at elevated price levels, it is still the best value in the beef category. Beef 90s lean trimmings (USDA market), mostly from old dairy cows and Aussie imports, averaged $2.70 per pound for the 1st half of 2023 and are forecast to average a record-high $3.10 in the 2nd half of the year.
Read MoreThree weeks of intense heat across wide areas of the U.S. has brought yield risk to crops and safety threats to livestock. Despite recent rain in the Midwest, agricultural meteorologists say that the heat has dried up ground moisture quickly and that wheat, soybean, and corn crops are all under extreme stress. On the livestock side, animals reduce food intake and increase water consumption when temps soar.
Read MoreIn Friday’s monthly cattle report, the USDA said feedlot inventories were 11.03M head on Aug 1, down 2.3% from a year ago. New placements onto feedlots in July were down 8.3%, and July marketings were down 5.3%. Beef cow herd numbers are at a 52-year low – with no signs that ranchers are planning to expand anytime soon.
Read MoreCorn futures that started the year at $6.70 per bushel are currently $4.7450 (8/11). That’s probably all you need to know about this year’s corn crop. But if you followed the crop’s development this season, you might expect that prices would be higher. This year’s crop was short of moisture for some of its critical growth stages.
Read MoreThe AAA national avg gasoline price hit $3.83 per gallon this past weekend, up from $3.53 a month ago, but still below last year’s $4.08. In 2022, gasoline hit a record high of $5.11 on 6/13 after Russia invaded Ukraine, then plunged to a $3.20 bottom on 12/26. NYMEX crude oil futures are $82.82/barrel (8/4), up from $71.79 a month ago, and have averaged a little over $75 year to date.
Read MoreNews outlets can’t stop talking about the possibility of a “soft landing” - where economic growth is slowed just enough to reduce inflation back to acceptable (2.0-2.5%) levels without triggering a recession and significant job losses. The PCE (Personal Consumption Expenditures) price index, the Fed’s preferred inflation measure, was up just 3.0% in June from a year earlier, vs. 3.8% in May and a high of 7.0% a year ago.
Read MoreThe USDA pegged total U.S. cattle inventory on July 1 at 95.9M head, down 2.7% from a year ago and a record low for this data set dating back to 1990. Separately, USDA said feedlot inventories totaled 11.2M head on July 1, down 1.8% from a year ago. New placements onto feedlots in June were 2.7% above a year ago, following a 5% increase in May.
Read MoreThe re-emergence of an El Niño weather pattern was supposed to bring more precipitation to the Midwest. So far, it’s been hit or miss. Timely rain has helped, but more is needed. In last week’s WASDE, the USDA said that “Two consecutive years of drought-affected Hard Red Winter (HRW) wheat crops reduce HRW ending stocks to the lowest level in 16 years” - despite drops in both food use and exports.
Read MoreThe USDA’s quarterly Hogs and Pigs report didn’t shed a whole lot of light on a confusing period in the pork industry. All hogs and pigs in the U.S. on June 1st totaled 72.4M head, up just 0.1% from a year ago. The market hog supply was up 0.2%, and the breeding herd down 0.4%. Farrowing intentions were all sharply negative: Mar-May -4.6%; Jun-Aug -5.6%; Sep-Nov -4.5%.
Read MoreOn June 21, the Environmental Protection Agency issued its new mandates for renewable fuel that U.S. refiners must mix with gasoline and diesel for 2023, 2024, and 2025. Although those volume mandates were increased modestly for 2024 and 2025, they fell far short of the expectations of the ethanol, biodiesel, and renewable diesel industries.
Read MoreIn Friday’s monthly cattle report, the USDA said feedlot inventories totaled 11.55M head on June 1, down 2.9% from a year ago. New placements onto feedlots in May were 4.6% above a year ago, and May marketings (from feedlots) were up 1.7%. While U.S. herd liquidation has slowed, imports of feeder cattle from Mexico and Canada are up 31% from last year – and likely account for the increase in placements.
Read MoreWith Father’s Day and Memorial Day behind us, middle meats hit their seasonal highs for the year in early June and should start trending downward as soon as July 4th buying is completed. #180 choice boneless strips at $10.50 per pound are at a seasonal high, up $2.50 per pound from a month ago, but look to be back down to $8.00 by Aug.
Read MoreLast week, the California Dept. of Food and Agriculture (CDFA) Animal Care Program hosted a webinar on Proposition 12. The CDFA’s Dr. Elizabeth Cox cleared the air a bit by saying “…the bottom line is, anything that’s ready to eat out of the package…. does not fall under Prop 12. For example, fully cooked bacon …. does not fall under Prop 12 as a covered product.”
Read MoreFor the past 3 years it’s been a steady drumbeat of Covid, supply chain disruptions, the Ukraine war, and wild swings in consumer demand. Those things sent commodity prices soaring. More recently, while we’ve all been busy complaining about inflation, commodity markets have come undone. Part of that is high prices curing high prices.
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